Service Tax is charged and levied on any provision of taxable services; made in the course of furtherance of business; by a taxable person; and in Malaysia. Service tax is not chargeable on imported services and exported services. The threshold is exceeding RM500,000 and RM1,500,000 (service of food and beverages preparation), for 12 months period and tax return to be submitted in the bimonthly taxable period. No threshold for credit card (RM25/ card), charge card, and forwarding agent.
Provision of taxable services under the Service Tax Act 2018 are as follows:
Furnishing of Return for the Last Taxable Period and Payment of GST
Any person who is registered under GST Act 2014 shall furnish the return and pay the amount of the GST relating to the supplies to the Director General as required under GST Act 2014 for the last taxable period not later than hundred and twenty (120) days from the effective date.
Claim for Input Tax and Refunds
Any person who is entitled to an input tax claim under the repealed GST Act 2014 which has not been claimed before the effective date shall claim in the last return to be furnished within hundred and twenty (120) days from the effective date. This claim is considered as the final claim for all input tax incurred.
If the input tax claim is subject to audit or investigation, the refund of the input tax credit can be paid by the DG within six (6) years from the effective date.
Effect on GST
With effect from the effective date, GST shall not be charged and levied on:
(i) Any supply of goods or services made in Malaysia and
(ii) Any importation of goods into Malaysia
Supplies Spanning GST 6% to GST 0% and GST to SST
1. Supply of Goods and Services Spanning GST 6% to GST 0%
GST shall be charged at the old rate on:
(i) The higher of the full/ part payment received or value of goods removed/ made available/ services performed. If full/ part payment received is higher than the value of goods removed/ made available/ services performed before 1 June 2018, it will be subject to GST at 6% and vice versa.
Tax implication on supply of goods and services spanning from GST 6% to GST 0% (notwithstanding invoice issued) is as follows:
No tax implication on taxable goods sold before 1 September 2018 (sold on 1 June 2018 onwards) and returned on or after 1 September 2018 because rate of GST is at 0% effective on 1 June 2018 to 31 August 2018.
No tax implication on taxable services provided before 1 September 2018 (provided on 1 June 2018 onwards) and taxable services terminated on or after 1 September 2018 because rate of GST is at 0% effective on 1 June 2018 to 31 August 2018.
For goods removed or made available or services provided before 1 June 2018, if payment or part payment received or invoices issued on or after 1 September 2018, the supply of goods or services is subject to GST at 6%.
For goods removed or made available or services provided after 1 June 2018 until 31 August 2018, if payment or part payment received or invoices issued on or after 1 September 2018, the supply of goods or services is subject to GST at 0%.
Tax implication on supply of goods spanning from GST to SST (invoice, payment, goods removed) is as follows:
Manufactured goods subject to Sales Tax:
Service Tax Due and Payable
If full or any part of the payment for any taxable service provided by the registered person is not received from the customer within a period of twelve (12) months from the date of the invoice for the taxable service provided, service tax will be due on the day following that period of twelve (12) months and has to be paid by the registered person.
Prescribed services subject to Service Tax:
1. Sale Value of Taxable Goods
Sales value of taxable good imported into Malaysia shall be the sum of the following amounts:
(i) The value of taxable goods for the purpose of customs duty;
(ii) The amount of customs duty, if any, paid or to be paid on such taxable goods;
(iii) The amount of excise, if any, paid or to be paid on such taxable goods.
Any registered manufacturer who receives taxable goods from any person to be manufactured and subsequently return the goods, the sale value of the goods manufactured will be the amount that the manufacturer charges for work performed by him (workmanship for subcontract)
2. Value of Taxable Service
The value of taxable service on which service tax is payable shall be determined as follows:
(a) Provided to a non-connected person, the actual value of the taxable service provided; or in the case of premium for insurance policy, or takaful contribution for takaful certificate, the actual premium or contribution paid;
(b) Provided to a connected person, the value of the taxable service which would have been provided in the ordinary course of business to a person not connected with the taxable person; or
(c) Where the taxable service are provided for free, the value of taxable service which would have been provided in the ordinary course of business to a person not connected with the taxable person.
Rights Granted for Life
Rights granted for life means:
(i) The service is made by a taxable person who is a club or other similar body, provides services under an agreement to grant rights;
(ii) The agreement provides whether expressly or implicitly that a right is to be granted or exercisable for the rest of the person’s life or for a period of not less than thirty (30) years; and
(iii) The rights is granted or first exercisable before the effective date (1 September 2018).
The club or such similar body refers to an establishment operated and managed by a registered company, e.g. Leisure Sun Club, Putra Golf and Country Club or Hills Clubhouse offering membership rights to use the facilities the club or clubhouse such as sports and recreation, food and beverage, accommodation and special privileges to the members’ guests. However, it excludes clubs with timeshare membership and the like.
Any payment for such rights made before 1 September 2018 will not be chargeable to Service Tax. However, any payment made on or after 1 September 2018 will be chargeable to Service Tax.
Example 1:
Maniam took a life membership at Bandar Permai Golf Resort (BPGR) for RM150,000 on 1 July 2018 and granted membership from 1 July 2018. He was issued an invoice for the said sum on the same day and allowed a payment schedule as below:
Using Example 1 above, if the membership term is for 20 years, the Service Tax treatment on Maniam’s payments will be as follows:
The calculation to determine the amount of Service Tax is as follows:
Payment for the services provided = [RM150,000/240] X 238 = RM148,750.00
Service Tax = RM148,750.00 X 6% = RM8,925.00
Retention Payment
Example 3:
A contractor makes a supply of services from 1 December 2017 to 31 May 2018. A sum of RM48,000.00 is retained for the satisfactory performance of the construction work. Since entire services was performed before 1 June 2018 (six months) and the retention payment was made after 1 June 2018, the amount of GST payable on the retention sum is subject to GST as follows:
RM48,000 x [6/106] = RM2,716.98
Bad Debt Relief
Exceeding six (6) months’ time frame to be given for businesses to claim bad debt relief even if it spans 1 September 2018. Bad debt relief is allowed to be claimed within hundred and twenty (120) days from the effective date.
Bad debt recovery made on or after 1 September 2018 must to be paid as output tax to RMCD by amending final GST-03 return for the last taxable period (submitted latest within 120 days after effective date)
Warranty
A supply of warranty is not subject to SST if the warranty:
(i) Begins before 01 September 2018 and ends on or after 01 September 2018; and
(ii) Relates to goods or services where the value of the warranty is included in the price of the goods and services at the time of purchase of goods or services.
The above SST treatment also applies to extended warranty purchased before 1 September 2018 and the supply of warranty spans the implementation of SST.
Frequently Asked Questions (FAQs)
Q : Whether or not the GST registered person is eligible to claim the bad debt relief on or after 1 September 2018?
A : GST registered person is eligible to claim the bad debt relief even if it spans on or after 1 September 2018.
Q : What is the timeline to claim bad debt relief ?
A : Bad Debt Relief is allowed to be claimed within hundred and twenty (120) days from the effective date.
Q : I have claimed bad debt relief before 1 June 2018. After 1 June 2018, my debtor repays the amount which I have been given relief. What is the GST rate applicable on my repayment of the tax due and payable after 1 June 2018?
A : Repayment of GST should be accounted for output tax at a standard rate of 6%.
Q : Tax invoice at GST 0% was issued on 31 August 2018 and full payment has been made on the same day. Goods were removed and made available on 1 September 2018. What is the procedure and document required to charge Sales Tax?
A : Goods removed or made available on 1 September 2018 is subject to sales tax. Adjustment should be made using debit note.
Q : I made a supply after 1 June 2018 and charged GST at standard rate of 6%. Tax invoice was issued to the buyer. This means I have MISTAKENLY charged GST. Do I have to account for tax at standard rate of 6%?
A :
(i) Yes. If a credit note CANNOT be issued to the buyer, GST at standard rate of 6% should be accounted for.
(ii) If a credit note can be issued and the company has accounted for the GST, the company may make adjustments in the GST-03 form in the taxable period credit note was issued.
Q : Whether a registered person under the Goods and Services Tax Act 2014 can still issue tax invoice or debit note after 1 September 2018 for services rendered or goods sold before 1 September 2018?
A : No. Tax Invoice is advisable to be issued before 1 September 2018
Q : Can a registered manufacturer claim special refund in the SST era?
A : No.
Q : Are consultation services, foods and drinks provided in private hospital, provision of rooms for lodging or sleeping accommodation subject to service tax?
A : No
Q : Company A have issued tax invoice at 6% GST in February 2018 on subscription for period from 1 January 2018 to 31 December 2018. GST return has been submitted to RMCD and output tax has been declared. Should Company A reissue the tax invoice for GST at 6% from 1 January 2018 to 31 Mei 2018, GST at 0% from 1 June 2018 to 31 August 2018 and Service Tax from 1 September to 31 December 2018 or the buyer should pay based on the actual tax invoice issued in January 2018?
A : Not required to reissue a tax invoice where GST under GST Act 2014 has been paid on the services to the extend covered by the earlier invoice.
Q : I was a GST registered person under the GST Act 2014 and became a registered manufacturer under the Sales Tax Act 2018 as at 1 September 2018. I supplied taxable goods before the Sales Tax implementation but due to some defective qualities, 10% of the goods were returned after 1 September 2018. A credit note was issued on the returned goods. What is the Sales Tax implication to the buyer if he is a registered manufacturer?
A : If your buyer is a registered manufacturer and he has claimed input tax credit on those goods he returned to you, then he has to account for output tax in the taxable period he returned the goods within 120 days from the effective date.
Q : Will GST paid for long term commitments in advance be refunded for the portion relating to post-GST period?
A : RMCD allows GST registered person to issue credit note to reverse the GST inclusive charged in advance for the portion relating to the post-GST period. GST registered person will have to make GST adjustment resulted from the issuance of credit note. If the long term commitments is a taxable supply or prescribed taxable services it will be subject to Sales Tax and Service Tax effective from 1 September 2018.
Q : I was a registered person under GST Act 2014 and I am a registered manufacturer on 1 September 2018 under the Sales Tax Act 2018. What is the tax treatment on the debit notes raised by me on or after 1 September 2018 as I had undercharged my customer (registered person) before 1 September 2018?
A : You have to account output tax in the taxable period debit note is issued.
Q : I am a GST registered person under the GST Act 2014 and not registered for SST. How do I claim input tax credit on goods returned to me after 1 September 2018?
A : You are eligible to claim any input tax credit on the goods return not later than hundred and twenty (120) days from the effective date.
Q : I am a Malaysian Timeshare Industry member since 2002 and the contract is for 38 years. I paid my membership in full the same year. What is the service tax treatment if I decide to sell my membership after the 20th year which is after 1 September 2018?
A : Any payment made on or after 1 September 2018 will be subject to service tax. If the rights are not paid in full before 1 September 2018 but paid in progressive payments and spans on or after 1 September 2018, will be subject to service tax.
Q : Private recreation fitness club joining fee is a taxable service under the GST Act 2014. What is the treatment on joining fees paid in full before 1 September 2018?
A : Joining fees paid in full before the SST implementation by current members are subject to GST even if part of the right to the membership continues after 1 September 2018.
Q : What is the service tax treatment on transport services provided by executive coaches or airport limousines that commence before 1 September 2018 and ends on or after 1 September 2018?
A : A supply of services is made when the services are performed. In the case of transport services provided by executive coaches and airport limousines that commenced on 1 June 2018 and ending on the 31 August 2018 is subject to GST at 0%. After the service tax implementation, the portion of the supply on or after 1 September 2018 is not subject to service tax.
Q : I took a photo shoot on 31 August 2018 and paid a deposit of RM100 as part payment for it. The pictures were delivered to me on 4 September 2018 and I made the balance of payment on the same day. Are the balance payments subject to service tax?
A : The balance payment is not subject to service tax but it is subject to GST because the services performed and invoice issued before 1 September 2018.
Q : Deposit (part payment) for the supply of goods / services has been paid before 1 June 2018 and goods / services are supplied after 1 June 2018. What is the GST treatment?
A : Part payment is subject to GST on the standard rate of 6% while the balance of payment if made after 1 June 2018 until 31 August 2018 is subject to standard rate of 0%.
Q : Jom Travel Sdn Bhd has made a hotel booking of RM101,760 and made a security deposit on 04 March 2018 amounting to RM30,528 and is expected to stay at the hotel on 15 July 2018. What is the GST implication on the supply to be made on 15 July 2018?
A : For the purpose of GST, the security deposit (not part payment) received is not part of consideration on the supply. The whole supply is subject to GST at standard rate of 0%.
Q : I purchased a flight ticket on 1 June 2018 when GST was 0% and scheduled to depart on the effective date, 1 September 2018. Do I need to pay service tax on the flight ticket purchase on 1 June 2018 and scheduled to depart on 1 September 2018?
A : Minister of Finance has given service tax exemption on the domestic flight ticket purchased before 1 September 2018 and schedule to depart on or after effective date, 1 September 2018.
Q : Full payment received on the removal of goods on 22 August 2018. However, the goods were only removed on 8 September 2018. What is the tax treatment?
A : Sales Tax will be charge at 10% on the value of goods removed.
Q : Tours & Travel Sdn Bhd has made a hotel group booking for 5 tourists from Indonesia and Tours & Travel Sdn Bhd has made a full payment of RM6,360 (inclusive of GST 6%) on 15 February 2018 and will be staying at the hotel from 1 July 2018 to 9 July 2018. What is the GST rate applicable to the supply made by the hotel operator?
A : Supply of accommodation services is subject to GST at standard rate of 6% because full payment has been made before 1 June 2018
Q : I have sold a shop lot worth RM1 million. I have made the full payment and S&P signed before 1 Jun 2018 but the key is handed over on the 1 September 2018. Is the property subject to GST?
A : Supply of land or property made is subject to GST even though the supply is made available on 1 September 2018 because tax invoice has been issued before 1 June 2018 and GST at 6% has been charged in the invoice issued.
Q : I have signed a sale and purchase agreement to sell a unit of commercial building worth RM 1,600,000 on 1 April 2018. Upon signing the agreement, 10% deposit was received and the balance 90% will be received within 90 days i.e. on 11 June 2018. Vacant possession (VP) will be given upon settlement of the full payment. What is the GST treatment for this transaction?
A : The deposit received upon signing the sale and purchase agreement which is part of the payment received before 1 June 2018 is subject to GST at standard rate of 6%. While, the remaining balance of 90% received on or after 1 June 2018 is subject to GST at standard rate of 0%.
Q : The joint management body / management corporation who manages the commercial buildings has received payment on 31 March 2018 as a consideration for the supply of maintenance and sinking fund for the period of 1 year from 01 January 2018 to 31 December 2018. Output tax at the rate of 6% has been accounted for in GST-03. Is there any change to the rate of tax for this supply?
A : GST remains at standard rate of 6%.
Q : Can the approved carried forward credit balance in TAP be refunded to the GST registered persons effective from 1 September 2018?
A : Yes.
Q : How to reclaim approved carried forward input tax credit?
A : GST registered persons can reclaim the carried forward input tax credit through the TAP and follow normal procedures of refund request.
Q : When GST input tax claim will be refunded to the GST registered person?
A : Input tax, subject to verification, audit or investigation, shall be paid by the DG within six years from the effective date.
Q : How long will it take for taxpayers to claim GST input tax after the implementation of SST?
A : You are allowed to claim input tax credit by submitting final GST-03 return within 120 days after the effective date of SST.
Q : I am not a GST registered person. I still have stock of goods that have been charged GST at standard rate of 6% after 1 June 2018. Can I claim refund?
A : No.
Q : Is the insurer required to refund the GST paid by a policy holder for insurance cover made under an agreement for a period from 1 January 2018 to 31 December 2018 and the tax invoice and the payment related to the supply for that period has been made before 1 June 2018?
A : Not required where GST has been paid on the services to the extend covered by the invoice.
Q : LMN Construction Sdn. Bhd. is a construction service provider. An amount of payment for his services had been retained by his customer as a retention sum. What is the GST treatment on the retention sum related to the construction work done before 1 June 2018 and the payment of the retention sum was made on or after 1 September 2018?
A : The amount of retention sum related to the supply made before 1 June 2018 is subject to GST at standard rate of 6%. LMN Construction Sdn. Bhd. is liable to account for the output tax upon receiving the retention sum even though payment was received on or after 1 September 2018.
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Edited by: 浪子
Bibliography
Royal Malaysia Customs Department. (2018). Transitional Rules. Retrieved from
https://mysst.customs.gov.my/assets/document/1.%20Guide_Transitional%20Guide_05092018.pdf
SST - Transitional Rules
Reviewed by 浪子
on
September 17, 2018
Rating:
Reviewed by 浪子
on
September 17, 2018
Rating:
